The counsel for Bombay Dyeing argued that the amendment in prohibition of fraudulent and unfair trade practices relating to securities market (PFUTP) regulations has been applied retrospectively which is against the basic principles of law and that the order was beyond the showcause notice as there was no allegation of any scheme or artifice and the alleged manipulation of accounts did not lead to any price manipulation.

There was no inducement of any investor, which is a sine qua non for a fraud case under the PFUTP regulations. Prior to 2013, there was no obligation to consolidate the results of subsidiaries with the company and the only obligation was to consolidate the accounts of subsidiaries and not the associated companies.

The lawyers for Bombay Dyeing further said the impugned order was impacting other companies where the promoters are acting as directors and has impacted the rights issues filed by the company, which may have a bearing on the company’s growth prospects.

The company requested the tribunal to allow its rights issue to be processed without any influence of the Sebi order as the company is starved for funds. Sebi does not process fund raise requests in case an order or a showcause notice has been issued.

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The Sebi counsel argued that the company was making losses but was shown as a profit-making company. The deal with Scal was nothing but an eyewash to inflate sales and revenue, and the facts of the case ex-facie establish the manipulation and no stay should be granted.

In October, Sebi banned Bombay Dyeing and promoters for alleged misrepresentation of financial statements and also imposed a penalty of `15.75 crore on eight individuals and two entities. The market regulator also directed them to pay the fine within 45 days.

Bombay Dyeing promoters and Wadia’s sons, Ness and Jehangir, Scal Services and its former directors D S Gagrat, N H Datanwala, Shailesh Karnik, R Chandrasekharan and Durgesh Mehta were penalised in the case. While the ban for Bombay Dyeing, Wadia and his sons was for two years, the same for Scal and its then directors was one year.

Sebi levied a fine of Rs 2.25 crore on Bombay Dyeing, Rs 4 crore on Nusli, Rs 5 crore on Jehangir, Rs 2 crore on Ness, Rs 50 lakh on Mehta, Rs 1 crore on Scal and Rs 25 lakh each on the then directors of Scal.